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is working 24/7 to deliver on an order book that is full for halfway through 2007 for
their Dextran line of products, while initiating Phase III clinical trials for their
Cellulose Sulphate contraceptive microbicide product, and continuing Phase III clinical
trials for the Anti HIV transmission indication
Polydex Pharmaceuticals Ltd.
421 Comstock Road
Toronto, ON M1L 2H5
George G. Usher
Chairman, President and CEO
Interview conducted by:
Walter Banks, Publisher
Published - January 18, 2007
Mr. George Usher: Chairman, President and CEO
Educated at Malvern College and University of Guelph, Ontario, where he obtained an
Honours degree, Mr. Usher joined the Company, from university, in 1982. He held several
positions in production and management before becoming President for Canadian Operations
in 1986. He was elected to serve on the board of Polydex in 1988, becoming President in
1993, CEO in 1996 and Chairman in 1998.
Polydex, based in Toronto, Ontario, Canada, founded in 1969, is listed on the Nasdaq
Exchange. Polydex is engaged in the research, development, manufacture and marketing of
biotechnology-based products for the human pharmaceutical market, and also manufactures
bulk pharmaceutical intermediates for the worldwide veterinary pharmaceutical industry.
Polydex has developed a microbicidal gel, now ten years in the making, for potential use
by women as protection against the spread of sexually transmitted diseases, including HIV,
and unwanted pregnancies. This cellulose sulphate compound has completed numerous safety
trials and is currently being evaluated in large-scale Phase II and III human clinical
trials in the United States and Africa to determine Ushercells effectiveness at
preventing pregnancy and the transmission of HIV and other sexually transmitted diseases.
The extensive experience of Polydexs research team in the development of
dextran-based products has provided the Company with a unique position in the marketplace
for its products.
The Company has enjoyed an excellent collaboration with CONRAD, world leaders in
reproductive research, in the continued development of its primary human product,
Cellulose Sulphate. CONRAD has supported the development of this compound and established
continuing development partnerships with Family Health International (FHI), Center for
Disease Control (CDC), World Health Organization (WHO), HIV Prevention Trials Network
(HPTN), United States Agency for International Development (USAID), the Bill and Melinda
Gates Foundation, and others. Of sixty various microbicide candidates currently in
development, Cellulose Sulphate is among three leading candidates undergoing Phase III HIV
prevention trials, one of only two natural based compounds to advance this far, derived
CEOCFO: Mr. Usher, could you tell us how long youve
been with Polydex Pharmaceuticals and any changes that have taken place since youve
joined the team?
Mr. Usher: I graduated from the
university in 1982 and joined the company towards the end of that year. I started out on
the shop floor producing product, and graduated to management positions in the late
80s and 90s. I finally took over as president and then CEO starting in about
1996. During this time I was slowly taking over for my father Mr. Tom Usher and the change
in the company that took place under my leadership, is that weve become more
focused. My father, who founded the company in England in 1936, was the ultimate
entrepreneur, trying any and all good ideas. Many of the ideas that he chased were good,
so we ended up with too many good potential products that could be developed beyond our
existing business, which is based on Dextran. The problem was that we couldnt follow
through with them because we didnt have the resources, either capital or manpower,
so a lot of them fell by the wayside. Back in those days my dad would talk to people about
what was going on and they expected something to happen. Unfortunately, when nothing
happened, many people got frustrated and our credibility fell below zero. In the late
80s and early 90s when my dad and I started talking, I suggested that we focus
on a project that looked promising. Therefore, we ended up dropping one drug,
joint-venturing another, our cystic fibrosis drug, Usherdex 4, and focusing on the
Cellulose Sulphate (Ushercell), the contraceptive microbicide that we are developing with
CONRAD, a program of the Eastern Virginia Medical School. So, the big change is the
focusing of our objectives.
CEOCFO: You mentioned three products, which
do you have the greatest focus on currently?
Mr. Usher: We are actually focusing on
one product, which is our Cellulose Sulphate (Ushercell), the contraceptive microbicide.
It is one of four compounds in the world that has entered advanced stage clinical trials
and we are extremely hopeful about its success. We are also focusing on our established
business based on Dextran, and Dextran derivatives including Iron Dextran, which generate
sales of 6 and $7 million per year.
CEOCFO: What is the market for Dextran?
Mr. Usher: It is a wide market. Iron
Dextran is mainly used to treat anemia in piglets, so that is the veterinary market.
Dextran, Dextran Sulphate and other Dextran derivatives have a wide application. It would
take a day to tell you about all of them, but they are used in biotechnology, in lab
research, as base raw materials and for the production of some human pharmaceutical
With regard to our existing Dextran line of business, we are presently working 24 hours a
day, 7 days a week, and our order book is full for half way through next year (2007). We
are in the process of refurbishing our facility to significantly increase our production,
which will increase sales and increase our profitability. The Cellulose Sulphate is what I
would call the proverbial home run. That product, which my father nicknamed
Ushercell, is a potential contraceptive microbicide, for human use, and the potential
there is mind-boggling. The concept is that is could be used by a woman prior to
intercourse as a vaginal gel and it would prevent conception. There are no hormones in it
and it is more of a barrier method in that inactivates sperm. Therefore, there is no
concern about hormone levels going up and down and the resultant problems. From a
microbicide standpoint, when it gets to market it would be a compound that would help stop
the transmission of sexually transmitted diseases such as Chlamydia, Gonorrhea and HIV.
Therefore, it could help stop the spread of AIDS.
CEOCFO: How far along are you in clinical
trials and proving the applications for your Cellulose Sulphate product?
Mr. Usher: For our Cellulose Sulphate
product, in the contraceptive application we have completed Phase II clinical trials and
we hope to start Phase III clinical trials next year, which is literally the final Phase
of trails. In the HIV indication we are into Phase III clinical trails in Africa and India
and those should be completed around 2009 and 2010.
CEOCFO: Could you tell us about CONRAD and
your relationship with them?
Mr. Usher: CONRAD is an organization
in Arlington, Virginia, which has been helping us with this our Cellulose Sulphate
compound. They are a non-governmental organization (NGO), who acts as a conduit between
organizations, or philanthropic groups that have money to promote womens health or
anti-HIV drugs and companies that just do not have the money to do it. They have been
absolutely fantastic in helping us get to where we are today.
CEOCFO: Where are you with your Usherdex 4
product for cystic fibrosis?
Mr. Usher: Usherdex 4 is a compound
that we did a joint venture with, but that joint venture is stumbling along and
hasnt made the kind of progress that we had hoped. The basic problem is the lack of
funding as the groups that we hooked up with havent been about to raise the cash
necessary. However, we hope to make sure that it does keep going and as Cellulose Sulphate
gets further along, we will be devoting more of our attention to the cystic fibrosis
CEOCFO: What is the financial picture for
Polydex; going forward will you have to raise more capital and bring on more partners?
Mr. Usher: We are looking for partners
on the Ushercell product, because that is a product that Im told, although we could
take to market ourselves, we dont have the market presence. We also dont have
distribution and although you could buy both market presence and distribution, I think
that if we had a big or mid-sized pharma company that would help us take the product to
market, it would get there a lot sooner, have a broader distribution and the net returns
would be significantly larger. As far as raising money, we really dont have to.
CONRAD has been funding this and various government organizations like USAID and
philanthropic groups like the Bill and Melinda Gates Foundation fund them. Therefore, I
would say, so far so good.
CEOCFO: Would you say that you are set
financially for the next 3 to 5 years?
Mr. Usher: I wouldnt say that
set, but in pretty good shape. There is no problem looming on the horizon.
CEOCFO: What do feel you would need to do to
grow the Dextran side of your business?
Mr. Usher: To expand the sale in our
Dextran business, we need to expand our plant. Our order book is full through half of next
year or beyond. Therefore, we need to increase our production and that is a process that
we have started. We have a full construction crew on site and we have phase one underway,
which involves installing some new equipment and that would increase production of our
powdered product, which are our higher margin product. Once we get that going that will
then generate more money, a higher return and then we can get on to the other phase of the
increased production that we are looking to.
CEOCFO: In closing, could you address
potential investors and tell us why they should consider Polydex Pharmaceuticals?
Mr. Usher: I would like to start by
saying that investors need to discuss this with their investment advisors and beyond that
I would say that we are an interesting company. We have sales, we have a business and we
have a 28,000 square foot manufacturing site that we own. If you look at the balance sheet
and the debt, there really isnt much there. If you look at the number of shares
outstanding, it is extremely low and we need to do something on that front so that we can
increase the liquidity, increase the trading and we are addressing that. It is not going
to be a single action that we are going to take; it is going to be part of a broader plan.
Therefore, the fundaments of the company are sound but that may not be exciting in itself.
If you look at our Ushercell product, it is contraceptive microbicide compound, and yes
there are contraceptives that are out there, but they are having problems with some of
them. I heard on the news this morning about a patch that is having problems, because if
you take sauna baths it can make the amount of hormones coming out of it fluctuate. We
dont have to worry about that, because we are not into hormones, we offer more of a
barrier method that is in a womans hand and gives her more control. Therefore, I
think that in itself is interesting, because when it gets to a stage where we could
possibly be talking about stopping the spread of HIV/AIDS, that is a big one. Is it going
to get to market? I dont know; we certainly believe that it will, but it has to go
through the FDA process. However, if you look at that, the upside to this company is
potentially quite large.
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